Jannie Durand, CEO of Johann Rupert’s investment vehicle Remgro, has expressed his frustration at how long it takes for merger and acquisition deals to be approve by SA authorities, saying this is turning off international investors looking to do deals here.
Remgro is still pushing for a tie-up between its fibre subsidiary CIVH and Vodacom.
The deal involves CIVH fibre units Vumatel and Dark Fibre Africa (DFA), which were folded into a new holding company, Maziv.
Vodacom aims to take a 30% stake in Maziv, worth an estimated R13bn, with the option of raising that to 40%. The transaction was first announced in November 2021 and received approval from SA’s telecom regulator, Icasa.
However, the Competition Commission last year blocked the deal over competition concerns, with the parties set to argue their case before the Competition Tribunal in the next few months.
Durand told investors at the presentation of the group’s results on Tuesday that they are still keen to see the deal through – nearly three years after it was first announced.
"We, together with the CIVH and Vodacom management teams, fundamentally believe in the value of this transaction; the benefits for all stakeholders that stand to be unlocked through its successful completion," he said.
"These benefits include the very real and tangible positive social impact relating to critical issues such as the democratisation of the internet in rural and lower income areas by means of providing cheaper fibre to the greater SA; the potential for job creation, and economic growth for our country."
Remgro’s headline earnings fell 40% in the six months to end-December in what the investment holding company called "an incredibly challenging operating environment". The firm, which has investments in energy, healthcare, fibre, financial services and food, reported that headline earnings dropped 40.1% to R2.1bn, while headline earnings per share (HEPS) fell 39.1% to 381c.
The difference of 100 basis points (bps) in the HEPS measure compared with headline earnings represented the accretive effect of shares repurchased during the 2023 financial year and the period under review, the company said.
The group said SA’s energy constraints, inefficiencies in transport and logistics, slow pace of economic and structural reforms, and a general erosion of foreign investment confidence in the country were felt across its portfolio companies.
The interim period was characterised by consolidation and optimisation after Remgro’s shift towards a larger unlisted portfolio in 2023. A significant driver of the decline in headline earnings related to the effect of recent corporate actions, the majority of which were non-recurring items, it said.
The difficult operating environment, particularly in relation to the trading results of Heineken Beverages, also contributed to the material decline in headline earnings. These corporate actions and their effect on headline earnings include the IFRS 3 amortisation and depreciation charges of R178m relating to the additional assets identified when Heineken Beverages obtained control over Distell and Namibia Breweries.
Remgro’s portion of the negative fair value adjustment made by TotalEnergies on its Natref stock for the period under review amounted to R377m, due to Natref being classified as held for sale in terms of IFRS 5. Excluding the impact on headline earnings of the corporate actions, the headline earnings decreased by 13.1%, it said.
Total earnings amounted to a loss of R2.39bn compared with a profit of R3.95bn a year ago. This decrease was due mainly to the R3.5bn impairment of Remgro’s investment in Heineken Beverages and the group’s portion of the impairments of Heineken Beverages’ goodwill created through the Distell-Heineken transaction of R1.8bn.
For the 2023 financial year, Remgro accounted for a profit on disposal of R3.4bn in respect of the Distell-Heineken transaction. Remgro’s intrinsic net asset value per share fell 4.6% to R236.95 by end-December. An unchanged interim dividend of 80c per share was declared out of income reserves.
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